Articles Posted inReal Estate Investment Trusts

Would you listen if a company selling its stock asked you to reject a buyer’s offer?

That’s the conundrum facing stockholders of American Finance Trust, Inc. (NASDAQ: AFIN.) This REIT was formerly not traded, and sponsored by AR Global. The company has 75% of its Class A and former Class B-1 shares, 400,000, on the NASDAQ. The remaining Class B-2 shares are expected to be listed in January 2019.

McKenzie Realty Capital Inc. made, for the second time, an unsolicited tender offer to purchase up to 400,000 shares of each class of the company’s common stock. AFIN’s board is urging stockholders to reject McKenzie’s offer. However, both sides offer reasons for their recommendation.

Silver Law Group has filed a FINRA arbitration claim against IFS Securities and Voya Financial Advisors, Inc., two firms that employed Greenville, South Carolina-based broker James T. Flynn (CRD# 3082615).

In the securities arbitration complaint, the Claimant alleges that she entrusted Flynn with a significant amount of money to manage while he was employed with Voya Financial Advisors and IFS Securities. According to the complaint, Flynn then proceeded to recommend significant positions in illiquid investments and non-traded REITs, including a Phillips Edison REIT and a business development corporation (BDA) called Business Development Corporation of America.

Flynn proceeded to recommend, according to the FINRA arbitration complaint, the Claimant invest a significant amount of money in these investments. Claimant alleges Flynn made these recommendations solely due to the significant fees and commissions he would earn selling these products. Due to these unsuitable recommendations and IFS Securities and Voya Financial Advisors’ failure to supervise Flynn, Claimant allegedly lost a significant amount of money.

According to Flynn’s FINRA BrokerCheck report, he was based out of the Greenville, South Carolina branches of IFS Securities and Voya Financial Advisors. After he failed to respond to a FINRA inquiry that followed approximately 17 disclosures and two employment terminations within one year, he was permanently barred in June 2018.

Flynn has a total of 22 disclosures on his FINRA BrokerCheck report, including his banishment from the securities industry.

Upon information and belief, Flynn primarily sold his customers non-traded REITs and other illiquid investments including the Philllip Edison REIT and The Business Development Corporation of America.

Robert Scott Ginsberg (CRD #5177531) is a registered broker and investment advisor currently employed with Woodbury Financial Services, Inc. (CRD #421) of Wallingford, CT. He was previously employed by Investors Capital Corp. (CRD #30613), also of Wallingford. He has been in the industry since 2008.

Ginsberg is the subject of two disclosures in his record. Both are customer disputes filed in 2017, and are currently pending.

The first was filed on 12/07/2017, alleging “suitability.” No damages are listed, and no other information is available.

The SEC has strict rules about how a broker-dealer operates, runs their business and keeps records. Any variation from these rules can trigger a sanction or other regulatory process. Centaurus Financial has been the subject of multiple sanctions for various infractions and disputes filed by customers. For these regulatory sanctions, the company has paid over half a million dollars in penalties, fines and fees over the years. In some cases, there were no financial products involved or sold, only regulatory violations.

Centaurus has paid out over three million dollars in securities arbitration awards and judgments.

Real estate investment trust, Parking REIT, which owns parking lots unveiled a $100 million initial public offering Tuesday as the company looks to pay off debts and expand an existing network of parking facilities across the U.S.

In a SEC filing with the U.S. Securities and Exchange Commission, Parking REIT set a $100 million maximum aggregate offering price. However, that $100 million figure may be a placeholder frequently used on initial IPO filings. Moreover, it is unclear whether investors will be able to sell their funds at or near their cost basis.

The Parking REIT is managed by Nevada-based The Parking REIT Advisors. The company invests in parking lots, garages and other structures in the U.S. Parking REIT said its primary use for the funds raised in the IPO will be the repayment of $9.1 million in debt, in addition to general corporate purposes, working capital and the acquisition of additional parking locations.

Marco Bartolo Azizi (CRD #2154719) is a registered broker and investment advisor currently employed with Centaurus Financial, Inc. (CRD #30833) of San Jose, CA. His previous employers include Summit Brokerage Services, Inc. (CRD #34643) and J.P. Turner & Company, L.L.C. (CRD #43177), also of San Jose, CA, and Global Capital Securities Corporation (CRD #16184) of Englewood, CO. He has been in the industry since 1991.

Silver Law Group is investigating the sale of American Finance Trust, Inc. (AFIN) and other illiquid investments by Centaurus Financial and several advisors including Marco Azizi. American Finance Trust (AFIN) was sold as a private REIT to many investors at $25 a share. After AFIN became publicly traded, the price dropped dramatically and currently trades at about $15 a share.

Azizi has two disclosures, both customer disputes filed in 2006, both with allegations of “unsuitability.” The financial products in question were Calpine Bonds. The most recent dispute was filed 3/7/2006, and requested damages of $33,199.54. The first dispute was filed 01/05/2006, with requested damages of $64,005.00. Both claims were denied.

How the company has violated or been accused of violating FINRA regulations

It is always important for investors to have a good understanding of the financial professionals they work with. Before handing over money to anyone, brokers should be vetted properly. This is why the Financial Industry Regulatory Authority (FINRA) created its BrokerCheck reports.

Not only do these provide good information on where brokers are licensed and their work histories, but they also reveal customer disputes, discharges, and alleged improper activity. But these reports don’t just cover brokers – they also include their member firms.

What the new code of conduct rule entails and how it could affect elderly investors

Up until earlier this year, the Department of Labor had a rule in effect for fiduciaries that specified that they couldn’t earn commissions unless the advice they offered was in the best interests of their clients. In addition, the rule mandated that they could only earn reasonable compensation and must be transparent about this compensation as well as the products they sell.

However, in March, a federal appeals court struck down the DOL’s rule. Recently the SEC proposed their own rule – called Regulation Best Interest or Reg BI – that aims to address three areas:

Silver Law Group is investigating claims on behalf of investors who purchased American Finance Trust, Inc. (Nasdaq: AFIN) – a real estate investment trust (REIT) sponsored by AR Global with a focus on the management and acquisition of a service-focused tenant portfolio.

AFIN REIT LOSSES?

According to a report from investment bank, Robert A. Stranger & Co. Inc., AFIN American Finance Trust’s listing has been described as a “belly flop,” and has “eroded approximately $1,000,000,000.00 of the company’s equity value.”